PJM’s annual capacity market uses a single capacity product, referred to as Capacity Performance, under which participating generation resources must deliver a committed level of electricity at any time for the entire year. When it accepted the Capacity Performance product in 2015, FERC held that using the same capacity requirement for winter and summer would increase reliability; and that applying an annual capacity product to all generating resources, including seasonal resources, was appropriate because it created the same expectations for all capacity resources without regard to technology type. PJM later amended its capacity market rules to provide an aggregation mechanism whereby seasonal resources pair up in order to provide what is effectively an annual product.

Old Dominion Electric Cooperative and the Advanced Energy Management Alliance filed complaints against PJM in January 2017 alleging that the Capacity Performance construct is unjust and unreasonable because it prevents participation of seasonal resources in the capacity markets. The complainants pointed to the fact that PJM is a summer-peaking system, and provided planning studies and other data they argued showed that capacity needs in PJM vary between seasons. Complainants therefore argued that PJM could procure capacity in a manner that better recognizes those seasonal needs and satisfies its resource adequacy targets more cost-effectively. FERC agreed that the evidence justified additional investigation, and convened a technical conference, which was held in 2018 (see March 6, 2018 edition of the WER).

FERC’s May 21 order denied the complaints, finding that the data provided by the complainants and at the 2018 technical conference was insufficient to justify a finding that the Capacity Performance model is unjust and unreasonable. FERC also rejected arguments that the Capacity Performance model unfairly discriminates against seasonal resources, and, pointing to PJM’s amendments to permit aggregation of seasonal resources, observed that PJM had already acted to improve the ability of its capacity market to integrate seasonal resources. FERC concluded that it was not convinced that PJM should abandon the Capacity Performance model, and that PJM deserved the opportunity to gain more experience with the model to determine whether it provides performance and reliability during all seasons of the year.

In a separate concurring statement, Commissioner Glick agreed that the record did not demonstrate that the Capacity Performance model is unjust and unreasonable. However, Commissioner Glick added that a seasonal capacity construct appears to be a more just and reasonable approach that could allow more resources to provide capacity, thereby increasing competition and promoting more efficient pricing.

]]>FERC to Convene Technical Conference on Impacts of COVID-19 on the Energy Industryhttps://www.troutmanenergyreport.com/2020/06/ferc-to-convene-technical-conference-on-impacts-of-covid-19-on-the-energy-industry/
Thu, 04 Jun 2020 14:23:29 +0000https://www.troutmanenergyreport.com/?p=11466On May 20, 2020, FERC issued a notice that it will convene a Commissioner-led technical conference on Wednesday and Thursday, July 8–9, 2020 from approximately 9:00 a.m. to 5:00 p.m. Eastern time each day “to consider the ongoing, serious impacts that the emergency conditions caused by COVID-19 are having on various segments of the United States’ energy industry.” The notice stated that the technical conference will explore potential long-term impacts on FERC-regulated entities to ensure the continued efficient functioning of energy markets, electric transmission, transportation of natural gas and oil, and reliable operation of energy infrastructure, while also protecting consumers.

The notice also stated that technical conference will provide the public with an opportunity to hear high-level discussions of how COVID-19 has impacted the energy industry. In particular, the notice says that the technical conference will include panels and cover various issues, including (1) the energy industry’s ongoing and potential operational and planning challenges due to COVID-19, as circumstances change moving forward; (2) the potential impacts of changes in electric, natural gas, and oil demand on operations, planning, and infrastructure development; and (3) issues related to access to capital, including credit, liquidity, and return on equity issues.

The technical conference will be open for the public to attend remotely. Members of the public are encouraged to preregister online here. A copy of the notice is available here.

]]>FERC Finds PJM Tariff Lacks Transparency for Pseudo-Tied Resourceshttps://www.troutmanenergyreport.com/2020/06/ferc-finds-pjm-tariff-lacks-transparency-for-pseudo-tied-resources/
Thu, 04 Jun 2020 02:58:38 +0000https://www.troutmanenergyreport.com/?p=11462On May 21, 2020, FERC issued three orders denying, or denying in part, complaints against PJM Interconnection, L.L.C. (“PJM”), finding that the complainants failed to demonstrate that PJM’s pseudo-tie rules are unjust, unreasonable, or unduly discriminatory or that such rules had been applied in a manner inconsistent with the PJM Tariff. With respect to PJM’s market-to-market flowgate test and its electrical distance requirement, however, FERC granted the complaints in part, finding that PJM’s Tariff fails to provide an open and transparent process regarding PJM’s administration of those requirements.

All three complaints involved external resources seeking to participate in PJM’s capacity auctions. Under PJM’s Tariff, such resource must be pseudo-tied from their native balancing authority area (“BAA”) and meet a set of threshold Tariff requirements that were approved by FERC in 2017. These requirements include, among other things, satisfaction of a flowgate test and an electrical distance requirement. The complaints filed by Brookfield Energy Marketing LP (“Brookfield”) and Tilton Energy LLC (“Tilton”) focused largely on PJM’s flowgate test, whereas the Cube Yadkin Generation, L.L.C. (“Cube Yadkin”) complaint focused on the electrical distance requirement.

FERC’s May 21 Orders addressing the Brookfield, Tilton, and Cube Yadkin complaints came after a FERC-instituted a paper hearing examining the issues raised by the complaints, including PJM’s interpretation and application of the flowgate test. In its May 21 Orders, FERC found that none of the complainants had demonstrated that the pseudo-tie requirements themselves were unjust and unreasonable, or the PJM had failed to properly follow its Tariff. However, FERC did find that the PJM Tariff was unjust and unreasonable for failing to provide an open and transparent process for pseudo-tie applicants to determine the reasons why PJM determined that their resource failed the relevant tests. FERC recognized the complexity of the system modeling involved and stated that PJM should be able to change its modeling assumptions as needed, but explained that any such changes must be transparent and afford interested parties the opportunity to question and challenge the changes.

To remedy the unjustness and unreasonableness of the tariff, FERC ordered PJM to revise Attachment DD of its Tariff to require PJM to (i) post to its website material assumptions that are used in the modeling, (ii) provide pseudo-tied applicants a copy of their test results and related workpapers, and, (iii) upon request, meet with each applicant to discuss the specific modeling assumptions employed by PJM and ultimate test results.

A copy of the orders are available here (EL18-145), here (EL19-34) and here (EL19-51).

]]>On Rehearing, FERC Decides Not to Require Prospective Refund Commitment from Non-Public Utility Transmission Ownershttps://www.troutmanenergyreport.com/2020/06/on-rehearing-ferc-decides-not-to-require-prospective-refund-commitment-from-non-public-utility-transmission-owners/
Thu, 04 Jun 2020 00:51:32 +0000https://www.troutmanenergyreport.com/?p=11460On May 21, 2020, FERC reversed, on rehearing, an earlier determination from October 2017 that the Commission has the authority to require the Midcontinent Independent System Operator, Inc. (“MISO”) to revise its Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to include refund commitments by non-public utility transmission owning members. FERC found that although it has authority to review non-public utility rates included in jurisdictional rates (such as MISO’s), it was neither necessary nor appropriate to impose the refund commitment contemplated on non-public transmission owners in MISO. FERC also dismissed, as moot, MISO’s compliance filing submitted in response to the October 2017 Order, and terminated various related proceedings.

Federal Power Act (“FPA”) Section 201(f) exempts certain non-public utility entities from regulation under FPA Part II unless a provision makes express reference to them. However, FERC explained in its rehearing order that when a non-public utility becomes a transmission-owning member of a regional transmission organization (“RTO”) or independent system operator (“ISO”), and its revenue requirement becomes a component of the RTO’s/ISO’s jurisdictional rate, FERC has jurisdiction to analyze the non-public utility’s rates, to the extent that those rates affect jurisdictional transactions, to ensure the RTO’s/ISO’s rates remain just and reasonable. Because FERC generally lacks refund authority over governmental entities and non-public utilities, FERC has established a policy concerning review of RTO/ISO tariff filings, pursuant to which, as described by the United States Court of Appeals for the District Court of Columbia Circuit (“DC Circuit”), FERC “will accept the RTO’s filing of a tariff revision where the non-jurisdictional entity voluntarily agrees to make refunds in the event the Commission determines the rate as filed is not just and reasonable, or the Commission will delay the effective date of the proposed rate while it conducts a section 205 review, unless there is no material issue.”

In February 2015, certain non-public utilities filed a complaint against various MISO Transmission Owners, claiming that such owners’ return on equity (“ROE”) was unjust and unreasonable. Although the ROE concerns were the subject of multiple actions (see May 27, 2020 edition of the WER), as relevant to this issue, in July 2016 FERC opened a separate proceeding under FPA Section 206 to evaluate whether the lack of a general refund commitment by non-public utility MISO transmission owners rendered MISO’s resulting jurisdictional rates unjust and unreasonable. As FERC explained in its July 2016 order, and in the October 2017 Order on rehearing, although FERC applied its policy on non-public utility refund commitments to apply only to the specific proceeding at issue, it was appropriate to extend such a policy prospectively to “the full range of situations in which [non-public utility transmission owners] may receive revenues associated with service provided due to their status as transmission-owning RTO members.” Accordingly, FERC directed MISO to submit a compliance filing demonstrating the necessary refund commitments.

Several non-public utilities and associated groups sought rehearing, arguing that FERC erred in doing indirectly what it is prohibited from doing directly, i.e., requiring MISO to procure a refund commitment by non-public utility transmission owning members that would be unenforceable. Other parties argued that FERC erred by ordering MISO to make a compliance filing without first finding that MISO’s Tariff and governing documents were unjust, unreasonable, and unduly discriminatory, or preferential.

On review, FERC granted rehearing of the October 2017 Order for four reasons:

the relevant appellate precedent did not compel FERC to require a prospective refund commitment from all non-public utility transmission owners in MISO, as contemplated by the October 2017 Order;

the D.C. Circuit has recognized that FERC generally does not have authority to require FPA section 201(f) entities to make refunds if they do not voluntarily do so;

declining to require the refund commitment contemplated in the October 2017 Order is consistent with FERC’s longstanding policy goal of encouraging the participation of non-public utilities in RTOs/ISOs, and appropriately accounts for distinct characteristics of these entities.

Ultimately, FERC also found that the lack of a general prospective refund commitment by non-public utilities did not render MISO’s rates unjust and unreasonable or unduly discriminatory or preferential. Accordingly, FERC granted rehearing, dismissed the relevant proceedings, and dismissed MISO’s compliance filing at moot.

]]>Next Round of Hydroelectric Incentive Funding Now Availablehttps://www.troutmanenergyreport.com/2020/06/next-round-of-hydroelectric-incentive-funding-now-available/
Mon, 01 Jun 2020 19:27:36 +0000https://www.troutmanenergyreport.com/?p=11458On May 7, 2020, the U.S. Department of Energy (DOE) began accepting applications for the latest round of Hydroelectric Production Program funding under section 242 of the Energy Policy Act of 2005 (EPAct), and issued a notice updating its guidance.

Under EPAct section 242, the Secretary of Energy is directed to provide incentive payments to the owner or authorized operator of qualified hydroelectric facilities for energy generated and sold by the facility for a specified 10-year period (see 42 U.S.C. § 15881). Facilities eligible for funding must have begun operating between October 1, 2005 and September 30, 2015. DOE allocated $7 million in the latest round of funding, and qualified facilities will be selected based on the number of kilowatt hours (kWh) generated in calendar year 2019 (CY19). Hydroelectric facilities may receive up to 2.3 cents per kWh for hydropower generated during the CY19 incentive period, with a limit of $750,000 or less depending on the total kWh of eligible power generation. The DOE’s Water Power Technologies Office is accepting applications until July 13, 2020.

More information on the Hydroelectric Production Program and the application process is available here.

]]>Dam Fails at Michigan Project with Revoked FERC Licensehttps://www.troutmanenergyreport.com/2020/06/dam-fails-at-michigan-project-with-revoked-ferc-license/
Mon, 01 Jun 2020 18:00:48 +0000https://www.troutmanenergyreport.com/?p=11456On May 19, 2020, the Edenville dam on the Tittabawassee and Tobacco Rivers in central Michigan was breached during historic flooding. The downstream FERC-licensed Sanford Dam (Project No. 2785) was later overtopped by the increased flows from the Edenville breach. Evacuation orders were issued for around 10,000 residents in the area and floodwaters from the dam failures encroached on downtown Midland, Michigan, and a nearby Dow Chemical complex.

Prior to its failure, the Edenville dam had a long history of noncompliance with the dam safety requirements of its Federal Energy Regulatory Commission (Commission or FERC) license. Over 15 years ago, FERC began notifying the then-licensee of concerns at the Edenville project, including the project’s inadequate spillway capacity and its inability to pass the Probable Maximum Flood (PMF)—the flood that could be expected from the most severe combination of meteorological and hydrologic conditions reasonably possible in the area. After the licensee failed to respond to FERC’s dam safety directives for years, FERC in 2017 issued a formal compliance order finding the licensee in violation of its license and Commission regulations. FERC’s primary concern was that the licensee had failed to increase the spillway capacity. The Commission’s compliance order noted that the Edenville dam had a high hazard potential rating, meaning that a failure of the project’s works would create a threat to human life or cause significant property damage.

By issuing the 2017 compliance order, FERC met statutory requirements under section 31 of the Federal Power Act (FPA) to impose penalties on the licensee if it failed to comply with license obligations. And several months later, the Commission did just that, ordering the licensee to cease generation of power at the Edenville project based on its continued failure to comply with the terms of the compliance order.

Several months later, after the licensee continued its failure to bring the Edenville dam into compliance with FERC dam safety requirements, the Commission in 2018 invoked its rarely used authority under FPA Section 31 to revoke the license for the project. In its order, FERC referred to its repeated attempts over 14 years to get the licensee to correct noncompliance with Commission requirements and noted that at the time of license revocation, the spillway capacity at the project could only pass 50% of the PMF. Following revocation of the license, jurisdiction over the license passed to the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for dam safety regulatory purposes.

On May 20, 2020, one day after the Edenville and Sanford dam failures, FERC issued a directive to the licensee for the three dams for which is still holds a FERC license: the Sanford Dam, the Secord Dam (Project No. 10809) and the Smallwood Dam (Project No. 10810), the latter two of which are upstream of the failed Edenville dam. “Due to the extensive damage to the projects and the region as a result of the floodwaters and the Edenville breach,” FERC directed the licensee to fully lower the reservoirs behind all three dams, perform a dam safety inspection of the dams within three days after the flows recede, and immediately provide a verbal summary of the findings to FERC. In addition, FERC ordered the licensee to begin formation of a fully independent forensic investigation team to focus on the three dams. FERC noted that it would coordinate investigation of the Edenville breach with Michigan EGLE.

In response, the licensee made a filing in the FERC record, but this communication was filed as Critical Energy Infrastructure Information, and is therefore not available for public review. FERC issued a follow-up letter to the licensee on May 26, 2020 noting that the Sanford Dam was fully breached due to the high flows from the Edenville breach. In the letter, the Director of FERC’s Dam Safety and Inspections Division refuted the licensee’s claim that the Smallwood Dam sustained no consequential damage, explaining that its own site assessment revealed that the dam sustained erosion damage in multiple locations. FERC granted the licensee’s request for a two-day extension of time to submit a proposal for the forensic team, but indicated no further extensions would be granted. FERC issued an additional letter to the licensee on May 28 recounting the damage to the Sanford and Smallwood dams and additionally noting some erosion on the downstream slopes of the Secord dam. The May 28th directive ordered the licensee to file an incident report under section 12 of the Commission’s dam safety regulations for all three licensed dams by June 16, 2020.

]]>President Trump Issues Executive Order Directing Regulatory Relief to Support Economic Recovery from COVID-19https://www.troutmanenergyreport.com/2020/06/president-trump-issues-executive-order-directing-regulatory-relief-to-support-economic-recovery-from-covid-19/
Mon, 01 Jun 2020 14:07:49 +0000https://www.troutmanenergyreport.com/?p=11454On May 19, 2020 President Trump issued an Executive Order directing federal agencies to “combat the economic consequences of COVID-19” by “rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery.”

To encourage a nationwide economic recovery from the impacts of COVID-19, the Order includes five directives to the heads of all federal agencies. First, it directs agencies to “use, to the fullest extent possible…any emergency authorities that I have previously invoked in response to the COVID-19 outbreak or that are otherwise available to them” to assist in economic recovery. This provision also encourages agency heads to use “non-regulatory actions” to promote economic recovery.

Next, the Order directs the heads of all agencies to “identify regulatory standards that may inhibit economic recovery” and to consider appropriate actions such as rescinding those standards on either a temporary or permanent basis; modifying, waiving, or exempting entities from those requirements; or exercising temporary enforcement discretion with respect to those standards.

Third, the Order directs the heads of all agencies to exercise enforcement discretion “against persons and entities that have attempted in reasonable good faith” to comply with statutory and regulatory standards. It directs all agencies except the Department of Justice to “accelerate procedures by which a regulated person or entity may receive a pre-enforcement ruling under Executive Order 13892,” which concerns civil administrative enforcement and adjudication.

The Order also requires agencies to “revise their procedures and practices” in light of certain “principles of fairness” in administrative enforcement, including transparency, freedom from improper government coercion, burden of proof, and other elements concerning due process in administrative adjudication.

Finally, the Order directs agencies to review their regulatory standards, actions taken, and any other regulatory flexibilities to determine which of those “would promote economic recovery if made permanent,” provided those actions are consistent with other policy considerations described in the Order. It directs the agencies to report the results of these reviews to the Director of the Office of Management and Budget, the Assistant to the President for Domestic Policy, and the Assistant to the President for Economic Policy.

]]>Legislative Proposal in California Seeks to Avoid Waiver for Water Quality Certifications Under Section 401 of the Clean Water Acthttps://www.troutmanenergyreport.com/2020/06/legislative-proposal-in-california-seeks-to-avoid-waiver-for-water-quality-certifications-under-section-401-of-the-clean-water-act/
Mon, 01 Jun 2020 14:05:58 +0000https://www.troutmanenergyreport.com/?p=11452As the California Legislature prepares its 2021 budget and continues to address the impacts of COVID-19, the Subcommittee 2 on Resources, Environmental Protection, Energy and Transportation (Subcommittee) proposed language in a trailer bill related to the State Water Resources Control Board’s (Water Board) authority to issue water quality certifications under section 401 of the Clean Water Act (CWA) for federally licensed and permitted activities. If enacted, the bill purportedly would authorize the Water Board to meet the one-year action requirement under CWA section 401 by issuing a water quality certification—even if California Environmental Quality Act (CEQA) requirements are not met. Further, the bill seeks to authorize the Water Board to make any changes to conditions in the water quality certification at a later date after CEQA requirements are met.

The California bill is a response to recent federal court decisions holding that CWA section 401 imposes an absolute one-year period for states to act on a request for water quality certification. In Hoopa Valley Tribe v. FERC (see Jan. 30, 2019 edition of the WER), the D.C. Circuit ruled that, where a state fails to act on an applicant’s request for water quality certification within one year, the state waives its authority to issue a certification. The U.S. Supreme Court denied certiorari in the case (see Dec. 11, 2019 edition of the WER). Since the D.C. Circuit’s Hoopa Valley decision, FERC has issued orders holding that states have waived their authority under section 401 in several hydropower proceedings that have been pending before FERC due to inaction by states on requests for water quality certification, as the statute precludes FERC from ruling on a hydropower licensing application before a state either issues a water quality certification or waives authority. Prior to FERC’s orders finding waiver, some of these hydropower licensing proceedings had been languishing for years due to inaction by states.

As the California agency that issues water quality certifications, the Water Board typically requires an applicant to complete consultation under CEQA, which can take years to complete, before it will issue a certification. Thus, in an apparent attempt to avoid having the CEQA process result in a CWA section 401 waiver in the future, on May 24 the Subcommittee proposed trailer bill language that would permit the Water Board to issue water quality certifications prior to the completion of CEQA analysis “if the board determines that awaiting completion of that environmental review poses a substantial risk of waiver of certification authority.” This proposed language would appear to permit the Water Board to issue water quality certifications that are not based on a complete environmental analysis under CEQA. Moreover and most significantly, the proposed bill language includes a reservation of authority to allow the Water Board to make unilateral changes—i.e., without FERC approval—to the certification after it completes its CEQA analysis, “to the extent authorized by federal law.” Notably, such an authorization is highly controversial and may be preempted by the EPA’s proposed revisions to its regulations implementing section 401 of the CWA, which are due to be finalized in 2020, and which proposed to prohibit this type of reopening.

The state legislature is required to send a balanced budget to Governor Gavin Newsom by June 15. While it’s not clear whether this provision will gain traction in the short-term due to the legislature’s limited focus on COVID, wildfires, and the homelessness crisis during this session, it is an important bill to track due to its potential implications for 401 certifications in California. The proposed trailer bill language is available here.

]]>The Department of Energy’s Water Power Technologies Office Releases Request for Information on Hydropower Programhttps://www.troutmanenergyreport.com/2020/06/the-department-of-energys-water-power-technologies-office-releases-request-for-information-on-hydropower-program/
Mon, 01 Jun 2020 13:58:01 +0000https://www.troutmanenergyreport.com/?p=11450On April 27, 2020, the Department of Energy’s (DOE) Water Power Technologies Office (WPTO) released a Request for Information (RFI) to gather information and feedback from hydropower industry stakeholders on its Hydropower Program Research and Development (R&D) Strategy and Hydro and Water Innovation for a Resilient Electricity System (HydroWIRES) Research Roadmap.

DOE’s RFI explains that the agency has recently developed “foundational framing materials” including Vision and Hydropower Program Mission statements to serve as the basis for its long-term Hydropower R&D program, including some that were first presented at the WPTO’s public Peer Review process in October and November 2019. In April 2019, WPTO initiated the HydroWIRES program to better support the agency’s contributions to pumped storage hydropower’s integration into the U.S. electric grid.

The RFI requests information from hydropower stakeholders on whether, in their view, DOE’s draft Vision or Hydropower Program Mission statements include problematic language or inadequately address certain issues. It also asks stakeholders whether they agree with the framing and organization of challenges facing the U.S. hydropower industry and DOE’s potential approaches to addressing them; and requests recommendations to reframe or reorganize existing information.

With respect to the HydroWIRES Initiative, the RFI requests information on whether the HydroWIRES mission is properly focused, whether its technical objectives are valuable and achievable, whether there are research gaps that are not addressed, and what outcomes would be most impactful.

Responses to the RFI can be submitted electronically to WPTORFI@ee.doe.gov by 5:00 p.m. (ET) on June 24, 2020, and supporting documents on DOE”s Hydropower R&D Strategy and HydroWIRES program are available here.

]]>FERC Issues Order Finding Waiver of Water Quality Certification; California River Community Seeks State Action on Certification Waivershttps://www.troutmanenergyreport.com/2020/06/ferc-issues-order-finding-waiver-of-water-quality-certification-california-river-community-seeks-state-action-on-certification-waivers/
Mon, 01 Jun 2020 13:54:38 +0000https://www.troutmanenergyreport.com/?p=11448On May 21, 2020, FERC issued the latest in a series of orders finding that a state—California, in this case—waived its authority to issue water quality certification pursuant to section 401 of the Clean Water Act (CWA) for the Yuba County Water Agency’s (YCWA) Yuba River Development Project, a FERC-licensed hydroelectric project in northern California.

On April 28, 2014, YCWA submitted a timely application for a new license for the Yuba River Project (FERC No. 2246), located on the Yuba River, North Yuba River, Middle Yuba River and Oregon Creek in Yuba, Sierra, and Nevada counties, California. The Project was originally licensed in 1963.

Section 401(a)(1) of the CWA provides that any applicant for a federal license to conduct an activity which “may result in a discharge into the navigable waters of the United States” provide the federal licensing agency a water quality certification from the state in which the discharge originates, or evidence of the state’s waiver of certification. The CWA provides that where a state “fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request,” the certification is waived. It also provides that the licensing or permitting agency—FERC in this case—may not grant a license or permit until certification has been granted or waived.

YCWA initially requested water quality certification from the California State Water Resources Control Board (California Board) on August 24, 2017. The California Board acknowledged receipt of the application in a September 21, 2017 letter to Yuba County which stated that the County’s “letter initiates a one-year deadline from the date it was received for the [Board] to act on the request for certification” and that the “deadline for certification action is August 24, 2018.” On July 25, 2018, California Board staff sent an email to Yuba County, reiterating that the action date for the Yuba River Project was August 24, 2018, and inquired whether YCWA would be filing a California Environmental Quality Act (CEQA) document, which the California Board stated it needed to complete its environmental analysis for the certification request. YCWA replied the same day, stating that it planned “to submit the withdrawal/resubmittal letter on August 20.” Later that day, the California Board instructed YCWA to “submit the letter by next Friday” which was August 3. On August 3, 2018, YCWA withdrew and resubmitted its request for water quality certification, indicating that the project had not changed since YCWA filed its initial request the prior year. The California Board acknowledged receipt of YCWA’s letter and stated that it “serves as a formal withdrawal and re-filing request for certification,” and established a new certification deadline of August 3, 2019.

Following the D.C. Circuit’s issuance of its opinion in Hoopa Valley Tribe v. FERC (see Jan. 30, 2019 edition of the WER), which held that the withdrawal-and-resubmission approach does not re-start the statutory one-year deadline for water quality certification, the California Board issued an order denying YCWA’s request for water quality certification without prejudice, stating that, because the CEQA process and consultation under the Endangered Species Act (“ESA”) had not been completed, YCWA should file a new request for certification.

Instead, YCWA filed a request for the Commission to determine whether the California Board waived its water quality certification authority for the Project. The California Board, the California Department of Fish and Wildlife (California DFW), and the Foothills Water Network (Foothills) opposed YCWA’s request and argued that there was no agreement between YCWA and the California Board for YCWA to withdraw and refile its application; that YCWA acted unilaterally in doing so; that YCWA’s failure to submit a CEQA document prevented the California Board from issuing a certification; and that the California Board’s issuance of a certification would not delay FERC’s relicensing proceeding, even if it lasted beyond one year.

In its May 21 Order holding that the California Board waived its section 401 authority, FERC stated that “an explicit written agreement to withdraw and refile is not necessary to support a finding of waiver” and found that the “coordination between the California Board and YCWA alone is sufficient evidence that the California Board sought withdrawal and resubmittal as a means of circumventing the one-year statutory deadline for the state agency to act.” Because the California Board asked Yuba County to withdraw and re-file its request, the Commission found that the California Board was complicit in the applicant effectuating the withdrawal and re-filing of its request.

FERC also rejected the California Board’s argument that it was unable to act on the certification request because YCWA did not provide it with a CEQA document, noting that “the Board did not dispute Yuba County’s statements that the project had not changed between applications and that the Board had all of the information it needed to act.” The Commission reiterated its position from prior orders, stating that the “state’s reason for delay [is] immaterial,” and that, to the extent a state has insufficient information to act on a request for certification, it can simply deny the request. The Commission also dismissed the California Board’s argument that a finding of waiver would serve no purpose in this case, because FERC cannot issue a license until consultation under the ESA is complete. FERC found this argument unpersuasive, concluding that “[r]egardless of whether a water quality certification decision is the sole factor delaying a licensing proceeding, the general principle from Hoopa Valley still applies…” Finally, the Commission did not accept the California Board’s argument that Yuba County failed to exhaust its state administrative remedies, stating that the issue of whether a state waived its certification authority is a federal question properly before the Commission.

Relatedly, while YCWA’s request was pending with the Commission, a group of environmental organizations, including Foothills, California Coastkeeper Alliance, the South Yuba River Citizens League, Sierra Club California, and American Whitewater, filed a letter with California Governor Newsom, urging his administration to challenge FERC’s findings of waiver of section 401 under Hoopa Valley Tribe and to initiate state legislative action to prevent future waivers of California’s authority under section 401.